Good afternoon. Welcome to our 11th Annual TD Cowen Communication Infrastructure Summit. I'm joined today by the President and CEO of Uniti, Kenny Gunderman. Kenny, thanks for joining us.
Greg, thanks for having us. It's always a pleasure to be here, one of our favorite conferences.
Great, great to hear. You know, your stock's been down a little bit since the Windstream closing and then earnings. I think it was maybe $60 million lighter than a lot of the folks looking at in terms of our models. Obviously, with the Windstream merger, it was a little messy. Maybe you help articulate what you think the reasons were for the weakness. We didn't see any block shares, and most of the REIT and dividend investors are, you know, it's a small percentage of the float now. What would you contextualize the weakness to? What are the catalysts and execution you need to do to make it work?
Yeah, so we're very happy to have the transaction closed. That was a huge milestone that we've been working on for 18 months now. Really pleased with that. The tailwinds behind our business continue to be that two jet engines, right? Convergence and fiber-to-the-home, plus AI-driven demand in our commercial fiber business. Those themes are stronger today, frankly, than when we announced the deal. They've been growing over the past 12- 18 months. Our execution has been good. We put up a solid quarter from a performance point of view, right in line with our expectations. The growing demand in AI and the themes driving greater penetration opportunities within fiber-to-the-home, we think, are better than what we've expected. With all that said, intrinsically, we think the value of our business is better than it's ever been.
With respect to the reaction to the quarter and the close, we put it in two categories. One is that we did lower guidance, you know, Kinetic's behind plan. I'm sure we're going to talk a little bit about that today, but Kinetic's a little bit behind plan. We've got a great strategy and plan in place to get caught back up. Secondly, this is a big transaction and a lot of technical, a lot of technical things happening, right? We're going from a REIT to a C Corpor We're going from a triple net, largely op prop-co type business model now to a true fiber-to-the-home operator. There's a shift in the shareholder base. There's definitely some technical implications related to the merger consideration. We expected some volatility.
When we think about what we observe holistically, what we observe about our performance, and a relatively smallish reduction in the guide, we think it's probably more technical related. We've been out interacting a lot with shareholders for the past four, five, six days, and we haven't heard anything that rises to the top.
Got it. Maybe we can talk about the fundamentals, though, and that you had a guide down. I think it was four major reasons, and it was mostly all Kinetic related, really. One is Windstream's off to a slower 2025, if you will, in terms of builds and subsequent subscriber penetration. I think the second is you expect 2 million fiber-to-the-home passings this year, and there could be some higher costs as you accelerate to that build. The third is maybe pressure on the DSL side, maybe DSL, to be more specific. The fourth was, I think, the Fiber Forward spend, you know, to get that year two, year three penetration. You want to spend it. There's a lot there to chew on, but can you unpack some of this? Some of this seems more one-time in nature, right? Once you do all these initiatives.
Yeah, absolutely. I think you captured it correctly, Greg. The two big drivers of the guide down are really behind on the build and the pressure in the DSL business. The other two that you mentioned, incremental cost on ramping up the build, and really, I'd characterize it as ramping up the go-to-market in response. Those are more in response to the fact that we're a little bit behind plan. You put those things together, incremental costs this year, and not yet the benefit of those costs are what you're seeing. You're seeing a little bit of a drag in that spend before you start to see the benefit of it. Kinetic, over the past 18 months, has focused on subsidized builds first, as opposed to what we call strategic builds or unsubsidized builds. We're changing that. We're pivoting to unsubsidized builds immediately, essentially.
What that means is you just get to more homes because you're building to more dense homes as opposed to subsidized builds that are less dense. That'll get us a lot more homes and a pickup. Secondly, and very importantly, we're onboarding some third-party contractors. As you know, Greg, historically, Kinetic has built the vast majority of their homes internally, which is good from a cost perspective, but it also gives you a little bit less of a margin for error if you run into permitting delays or if you run into weather issues. If we've got third-party contractors, we've got surge resources, and we can move those resources around, especially if you've got good trusted partners, which I think we will have. That's happening real time.
That'll give us more predictability on the build and definitely, we think, the ability to get caught up on the build by the end of this year. With respect to some of the DSL pressure, that's just competition from fixed wireless predominantly and a little bit of satellite. I think the wireless carriers continue to focus on fixed wireless as a product right now. By the way, that helps us in our wholesale fiber business because that's leading to more fiber to the tower upgrades. I think that's going to change over time. I think eventually they're going to be more focused on fiber subs as opposed to fixed wireless. As we're building more fiber and we're transitioning DSL to fiber, that competitive pressure is going to take care of itself because we're going to have.
Because fiber always wins over fixed wireless, or not always, but predominantly versus fixed wireless against DSL, right?
Fiber is going to win. I've said it before and continue to think those subs that we're losing to fixed wireless today, I'd rather lose them to fixed wireless because we can go get them.
You get the money on the back end for the wholesale.
Not only that, but we go get those subs back because at some point fiber outruns fixed wireless from a reliability and a latency point of view, and we get those subs back two or three years down the road. I think we've got the right strategy and plan in place to mitigate the pressure that we're seeing for the balance of this year. Like I said, nothing has swayed our confidence in the future of the business.
Got it. You mentioned the third-party builders that you've contracted, and you know that'll take the cost per home pass up from your $650 per home to as high as $950. We talked about that, I think, at MayRead in June and even our TMT conference in May. Is that happening now then? Is that acceleration in the cost per home pass going up? Can you help us with the curve of that build cost?
Yeah, it's happening real time. I'm glad you remember us talking about that months ago because we foreshadowed that so as not to surprise folks. At $650 per passing, we think that's the best in the industry. That's because Kinetic has spent so much money over the years building fiber to the node, so that last mile, so to speak, to the home is just less expensive. Because it's so low and because we need those third-party contractors, we're willing to spend a little extra on the build to get that build accelerated. Going to $850- $950 in the coming year, year and a half is what you're likely to see. When you look at it over the life of the build, we're still going to be in that $750- $850 range. I think that's best in the industry.
Ultimately, we feel we have a lot of confidence in our ability to build within those ranges, given a lot of our build is still going to be internal. These third-party contractors that we're onboarding, we're locking in rates for a period of time. Predictability there, we'll still have what I think is industry-leading build costs, which gives us the ability to get to more homes economically, right? When you're building with confidence and at a low cost, you're able
to make some projects on the fringe doable.
Absolutely. Absolutely.
Your top line guidance was pretty good, but you had a lot of TDM in there, right? The expected revenue from the legacy TDM services. When should we expect the TDM costs to largely be out of the business?
Yeah, so as you know, Greg, we don't like to have legacy services in our story. We've always managed out of those at Uniti, just so there's a clear look at fiber revenue growth, top line, and EBITDA. Right now, out of the gate with our merger, we don't have that, right? We've got some legacy services, but we're going to manage out of those aggressively. There are really two areas where there's TDM today in the Windstream business. One is at managed services or what we're calling Uniti Solutions. To your point, we'll be fully out of that, virtually out of it by the end of this year, and a little bit may tail into 2026, but it'll be so small you won't notice. The other place where there's some TDM is in the Windstream wholesale business. This is long-haul transport, TDM, roughly $100 million of that.
That will weigh on top line a little bit over the next couple or three years. We're going to probably be fully out of that by 2028. We'll manage out of that. Like I said in the earnings last week, number one, those legacy services don't impair our brand in any way, right? It's not like we've got these laggard services that are weighing down the Uniti brand or even the Kinetic brand. Number two, they're already an immaterial part of the business, especially from an enterprise value perspective, from my point of view. As we accelerate fiber and we manage out of the legacy services, they'll become even more immaterial in a very short period of time. Thirdly, and very importantly, in the meantime, we're generating good cash flow off of them. So, you know, 40, 45%+ cash flow generation from an EBITDA minus CapEx perspective.
It's helping, essentially helping finance the build.
Off the cash and use it for fiber builds.
Exactly.
Got it. Wanted to talk about your penetration curves and that Fiber Forward initiative I alluded to. On your second quarter call, you said terminal penetration of 40% could actually prove conservative, which is encouraging to hear. However, when you look at the PEN curves today, it tells a little bit of a different story. You look at the 2022 cohorts in the slide deck you provided. Year one looks good, and then years two and three, you're just a little over 30%. I guess this Fiber Forward initiative should help that. Can you just provide more context of what the Fiber Forward initiative does and means and the cost that goes into that?
Yeah, great question. First of all, we're extremely excited to be bringing some fresh talent and fresh leadership into the company with experience from Ziply, experience from Frontier. You know, John Harobin is someone who's going to be leading Kinetic for us going forward. Bringing some good best practices from really successful copper to fiber conversion stories in the recent past is something that we're excited about. It's one of the things that gives us the ability to make comments about 40% being conservative because we can see the upside and the opportunity that maybe up to this point we haven't fully exploited at Kinetic. That's number one. Number two, we're doing a lot of things right. I mean, we grew fiber subs 15% year-over-year this past quarter, and we grew consumer fiber revenue almost 27%.
There is a lot of momentum in that business, but we think we can do better. I think two issues that we know are there. Number one, the build historically at Kinetic has been much more, I'd say, Swiss cheese in approach, picking those lower or higher returning markets all over the footprint. Also, maybe not fully optimized, right? We were in this op co-prop co-structure where there was an incentive to focus on Windstream-owned markets entirely as opposed to.
Greenfield expansion.
Greenfield expansion or the states where Uniti owned the underlying network. The build itself was probably not as optimized as it could have been. Over the past number of months, as we've gotten ready for this pivot, not only pivoting from subsidized builds to strategic builds, we've also refreshed the build plan itself. This new build plan is much more focused on clustering. It's much more focused on densification of existing markets, which gives you benefits of scale, whether it be from a sales perspective, marketing perspective, field tech, service delivery, you name it. You've got economies of scale like we have in Uniti Fiber for the past number of years. Secondly, I think the build itself probably got a little bit ahead of the go-to-market at Kinetic in the past. Building up the fiber fast start and Fiber Forward is part of what we're doing.
I think that's part of why we're a little bit behind at Kinetic today because that go-to-market was behind the build. To your point about penetration, when we build a market, our early penetration is very good because we have a very good DSL product and we've got a very good base to build off of. Following through in year two and three really requires that insurgent go-to-market where you've got boots on the ground, door to door, construction, permitting, and sales all aligned and coordinated both before the market launch and during. Ultimately, as we build up that go-to-market, you're going to see better penetration.
Right now, by the end of this year, we're probably going to have 30%- 40% more homes under our fiber fast start program because we just haven't had the resources in the past couple of years to get there, but we're ramping that up.
It's interesting you mentioned that. The Swiss cheese model, if you will, to take your term, now that you sort of have a new plan, you can build the scale and you can build faster, and then you can coordinate with marketing, you know, a lot cleaner.
Right.
Okay, that sounds interesting. Can you talk about Kinetic's ARPU? On the second quarter call, you discussed that in the tier two and tier three markets that you're in, that your markets, there's a little bit more pricing power that you can take advantage of. Does it make sense for going after subscriber growth to maybe just keep the prices down? I mean, I think you're at $80 or $90 for one gig plans. How does that compare, I guess, to the cable folks in your space? If you wanted to take trade P for Q, if you will.
It's a good question. It's definitely a debatable point and definitely an option. Kinetic is like Uniti Fiber. We're operating in tier two and tier three markets, so less competition. To us, that doesn't just necessarily mean fewer competitors. It also means that you're competing against national brands that maybe aren't as focused on these smaller markets as they are the tier one markets. That's a real advantage for a regional scale player that has nimble pricing power like we do at Kinetic. We definitely view those markets as less competitive. We definitely view fiber as the superior product. I think that's increasingly accepted among consumers, right? Not just telecom geeks like us in here. I think just average everyday Joe on the street, when they see fiber coming into their neighborhood, it's something that they aspire to have. That gives us a little bit more pricing power, those things.
As a result, our ARPUs are comparable to or slightly higher than our cable competitors. We could play around with P versus Q. I think we may look at that, but really, we think there's still ARPU growth in the business. Number one, 60%- 65% of our fiber subs are not taking full one gig speeds, right? There's an upsell opportunity there. Number two, we haven't really rolled out two gig more broadly yet. That's an opportunity for us to do that over the next year, year and a half. I think that, especially as we start to get into the inference phase of AI, fiber is going to become a more attractive product over time than it is today. It's already a superior product because people are going to want better latency. They're going to want more broadband. All of those things lead us to optimism about ARPU.
Thirdly, we have the ability to be more nimble in pricing. We are today relative to our cable competitors, but I think we can be more market specific in our pricing as we're doing in our door to door and our marketing. Those are all opportunities, and we're pretty excited about it.
Yeah, because that was my next question. If the long-term ARPU growth can be 3%, given you're a little more elevated in some of your plans, I guess you just point out three reasons: speed buy-ups, because 60% of the base doesn't have the one gig plan, you haven't really rolled out the two gig, and just be nimble on sort of hyper-local strategy.
Yeah, exactly.
I wanted to talk about ACP risk. In the past, Windstream, when I spoke with them a couple of quarters ago, they had 100,000 former ACP subs in the base, and Windstream was still subsidizing them even when ACP expired. Is that still the case, and is there a risk here?
That is still the case. There's around 70,000 ACP subs in the base today. I can tell you we're actively looking at that subsidy and don't want to get ahead of our market approach. More to come on that in the coming weeks. I don't think there's a lot of risk, especially when you do the math. That's not a huge number, but I think there's an opportunity for us to get some pickup.
Okay, it's down to 70,000 now.
Yeah.
I want to talk to the AT&T bundle that was mentioned on the call. You noted seeing churn and subscriber benefits by offering a $20 discounted bundle with AT&T. I guess how many people take the bundle of the gross ads? Is this discounted on your end? Who's in the $20 bundle discount? How is that sort of breaking out? I'll stop there. I have another question.
Yeah, yeah. The bundle's small today at Kinetic, so less than 50,000 subscribers take the bundle. We wanted to start talking about it because we think it's a really valuable, potentially a really valuable tool for us, and we think it validates the convergence theme that we're hearing about in the industry. To your point about the subsidy, the discount, we roughly split that 50-50 with AT&T. That's that. Number two, that less than 50,000 subs is growing pretty materially. Our attachment rate is somewhere in the 10%- 15% range, and by the end of next year, we think we'll be either at or above 100,000 subs. We're really excited about that growth that we're seeing. More importantly, the churn benefits have been terrific, you know, the 50%. As a result, we want to talk about it because it's positive and the themes are good.
At the same time, we think we can start using that bundle more tactically, targeting markets where we might have a little bit more competition and using it as a way to be a competitive advantage in some of these markets more tactically.
It's interesting, like, why not go the full MVNO route that other fiber providers are only getting wholesale wireless deals. It sounds like you're getting the bundle benefits anyway, and the churn benefits. Why get a comprehensive MVNO deal when you just bundle?
I think today what we're doing works really well for us. I do think over time, Kinetic having its own MVNO or being part of a broader wireless footprint makes a lot of sense. That's the reason we're talking about these themes and trends a little bit more granularly and openly, because we definitely see that as a possibility. Right now, we have a lot of opportunity in just the fiber footprint for the reasons we talked about earlier, right? The go-to-market really can be optimized. We don't want to distract too much of that selling motion on fiber with an MVNO, which would be more complicated than the bundle. The bundle today is simple, right? It's very easy to manage, whereas with an MVNO, you've got to have the back office in place and all those things.
Right now, for us, I think the bundle is the right thing to do. Over time, there's a lot of value to be had with an MVNO.
Right, right. That makes sense. Go after that year two, year three penetration and not complicate it with an MVNO structure at this point.
Right.
Want to shift gears and talk about Elliott Management, who owns about 24% of your shares. You know, there's a fear out there they could sell shares in the market. They do have four appointed board seats now. Can you provide insights on the working relationship and the path forward with Elliott Management to the degree you can?
I definitely can. I'm glad you asked that question because that is definitely a question that we've gotten a lot over the past week or so. We get it periodically, especially over the past week or so with the deal closing and Elliott disclosing how many shares they're actually going to own. We've been telling people 20-25%. That's not news, but I think when people see it, it's now become a reality. We've gotten a lot of questions about it. Up to this point, we haven't really answered the question because we don't like to talk about our customers by name, and we certainly don't want to talk on behalf of our shareholders.
The deal wasn't formalized yet. It's enclosed.
Exactly. Now that it has, I literally had a conversation with our partners at Elliott Management at the end of last week, so I'm not speaking out of school by saying that. Look, I think they view this investment more through a private equity lens as opposed to their traditional activist lens, right? When people worry about that big block of stock and whether it may come to market, that's not the way to look at it. Look at it through the private equity lens. When you remember that they've been an owner of Windstream since 2020, right? They had an opportunity to really cash out in our merger, not entirely, but largely take some cash, some chips off the table. They proactively chose to roll everything into this deal. They did that because they see the strategic value in the combination.
I think they also appreciate that in order for us to get to that strategic value, we need to be patient and we need to really optimize the build and all the other parts of Kinetic that we've talked about. I don't want to speak for them any more so than what I've already said, but I think it's unlikely you will see equity getting dribbled out into the public markets. I think there's a better way to optimize that value for that larger stake.
Got it. Shifting gears, the capital raises that you may or may not need, I'm just curious, to what degree and timeframe do you expect to access capital markets to continue to fund the fiber-to-the-home build?
That's a good question. We try not to foreshadow capital markets activity, Greg, as I know you appreciate. I won't go too far into that. I will say this year's, the rest of this year is fully funded. We've got ample liquidity going into next year as well. I think a lot of our activity over the past 12 to 18 months in the capital markets has been more refinancing as opposed to adding liquidity. We've got a lot of good tools. ABS is a tool that we've used at Uniti, and we've put an ABS in place on our commercial fiber business, and there's more to come there. I think we're really just starting to scratch the surface there. We really haven't, not really, we haven't put an ABS in place yet at Kinetic, and I think there's a big opportunity there.
We've said $3 billion-$ 4 billion of capacity, and we're making a lot of progress in our work towards being in a position to actually execute on that.
Right. You can now tap the Kinetic side of the house for an ABS raise because you did it on the commercial fiber side. In the past, when I think about big public companies doing those ABS raises, it took them a year. I guess they paved a wider road for you guys to maybe expedite that process. Can you describe where you are in that process of eventual ABS raise securitizing Windstream homes?
Yeah, that's great. ABS are great, really low cost of capital, and maybe it's investment grade capital, essentially. It's complicated. I think the nine months to 12 months is roughly about right in terms of the work stream. You're really setting up legal entities, right? These are bankruptcy remote special purpose vehicles, so there's a lot of legal work. The good thing is we've done it before, so we know how to do it. There is a tried and true path out there for fiber-to-the-home providers. We started about six months ago, so we're well down the path. I'd say highly confident that we're vectoring in on the ability to push the button on it later this year, beginning of next year.
Okay. Want to switch gears to the commercial fiber business? It took us 25 years to get there. You know, you mentioned a $100 million deal, 20-year IRU on existing routes. It sounds great. Should we think about this as like $5 million a year? Because I just take the $100 million and divide by 20 years. With that, when I look at my model, that augments your growth by like 1.5%. Is that the right way of thinking about that deal when you mentioned it on the call?
It definitely is. We get a lot of questions about how to account for the hyperscaler deals or how they're going to impact the model. I'm glad you asked the question, Greg. The reality is the economics of these deals really come down to the basic format we've talked about for years, which is the anchor lease-up model. We have an anchor customer that comes in to help us build the network at high single-digit cash flow yields, and then we lease up to incremental customers to get us well above that 10% cash flow yield, now approaching close to 30% blended yield on our projects. The hyperscaler deals fit within that mold, but they're just better from a returns point of view so far. A big part of that is because NRCs or upfront capital are higher than what we've traditionally seen from anchor customers.
There are multiple ways to look at it and how it might impact your model. Ultimately, what you see is that anchor investment, and then you see lease-up over time. To the deal that we announced last week, which is a terrific deal, we highlighted it because we really wanted to show the synergy of bringing Windstream and Uniti together, because that was a Windstream customer relationship, and the deal couldn't have happened without the Uniti network. There is more of that to come, by the way.
That was my next question. How many deals are in the funnel that look and feel like that?
I would say a lot. We're excited about it. We don't ever want to get over our skis. We started talking about our hyperscaler funnel for the first time last week because we've got confidence in our ability to monetize that funnel. We're pretty excited about it.
In that hyperscale funnel, you know, some of it might shift eventually to enterprise because we could talk about the inference phase. You mentioned before it's probably "sooner than you think." How should we think about inference demand? In support of your mid-single-digit growing company, is that like high single digits now? Where does inference fit in? What's the total addressable market for you?
Yeah, we definitely think inference is coming sooner rather than later. You know, when we all talked about AI a year ago or a year and a half ago, the hyperscalers were still hedging, I think, on the future of AI. They were making comments about it. There's more risk to underinvesting than overinvesting, and there's multi-use cases for the AI infrastructure that they're building just in case AI didn't materialize. Now their comments are substantially more bullish. You know, demand is outpacing supply, for example, and AI infrastructure is mission-critical. The timelines on AI usually surprise to the good versus the later. These are all almost verbatim comments from the hyperscalers. We're very bullish on inference, and we're very increasingly bullish on it happening sooner rather than later.
Greg, I think I've shared before, but to your point about the growth, we've always forecasted mid-single-digit growth in our fiber business. If you look at our internal models, that starts to get up to high single digits, even double digits, and that's before taking a more aggressive view of inference. You mentioned the 1.5% growth from that deal alone. The reality is that's before any incremental lease-up too, right? You put all these things together, and I go back to my opening comments. We're just very bullish on where we sit today from an industry tailwinds perspective, and that's just one example.
Right. Great. On the wireless side, on the call, you mentioned that the wireless bookings are up 30% year-over-year. Can you elaborate? Is that fiber to the tower 5G? We've been hearing even today at the conference, a lot more densification. Just help us with, in general, where this wireless demand is coming from.
Yeah, you know, last year, wireless bookings were flat to a little downish. We said, hey, we think 2025 is going to be an up year. We didn't think it was going to be up 30%. It's been better than we expected. I actually think the second half of the year might be even better based on what we see in the funnel. What is it? It is densification. We're starting to see small cells in a bigger way. We've talked for years about how we think small cells are coming to the tier two and three markets. We're starting to see more activity there than we've seen before. Secondly, there's a lot more upgrading of more rural towers, whether it be from one gig to 10 gig, and even increasingly talking about 25 gig. There are still microwave towers in the general footprint.
There's now a lot of investment to push fiber to those microwave towers. We're benefiting from all of that. I think it's all really a reflection of the carriers getting ready for continued broadband growth, whether you call it inference or just broadband growth in general.
On the rural side, maybe some fixed wireless as they're having success and they're rolling that out as well.
I totally agree.
Right. On the flip side, what challenges are you seeing in service delivery and meeting the demand so far?
Yeah, at Uniti itself, we really haven't seen any. We're staffed up. We've got good third-party contractors, and we're hitting our interval delays. I've always talked about 90 days as being that gold standard. We want to be below that, and we're hitting that on a regular basis. I think at Kinetic, like we talked about at the beginning, and I know we've already moved on from that, but I think having those trusted third-party contractors is important to be able to hit those timelines. We're not an AT&T or Verizon at that scale, but we are a scale business. As a result, we're able to promise good, steady business, and we're able to have partnerships with good scale, well-known, well-respected third-party contractors. We're excited to be onboarding them.
I want to switch gears and talk about the M&A environment. The M&A market seems open for business. We understand your company, you have your hands full with the integration of Windstream. Maybe down the road, help us with the various M&A scenarios that would be attractive to you once you're done with the integration of Windstream.
Yeah, we've done a lot of M&A in our history, very, very comfortable with it, and have definitely used it as a way to unlock value. I fully expect to stay engaged there. You're right, we've been busy for the past 18 months, getting ready for legal day one, focusing on integration, focusing on the build plan. We've never been too far removed from the strategic conversations in the industry. I think now that we're past legal day one, I suspect certainly in the industry, we're hearing of more and more conversations. We're hearing just chatter picking up among the carriers and others. I do think there's going to be activity.
Is that on the commercial fiber side or the fiber-to-the-home side?
I would say it's commercial predominantly, but I also think there's a growing sense of optimism around commercial fiber. I think there's a lot of capital in the data center space, third-party capital coming into the data center space. A lot of people are getting educated on AI and what it means. As we say, there's no data center. A data center is a warehouse without fiber. I think people are seeing the benefits of AI for fiber. I think there's more and more enthusiasm for that space too. I think over the next six, nine, 12 months, there's going to be a lot of activity.
That's on the commercial fiber side, like what sort of multiples are you seeing for, you know, healthy companies? I know we saw the Crown deal and the Everstream deal, but those are probably more one-offs of more struggling fiber companies.
Yeah, I mean, we've always talked about what we think the multiples are. I think our view of those value ranges hasn't really changed. I think there's still a premium applied to fiber businesses that own their network, that have good quality network, and are able to show good, steady top line and EBITDA growth and reasonable capital intensity, which is exactly what we have at Uniti. I think after a period of time of integration, we'll get right back to that at fiber infrastructure. I think the Crown business was probably sub-optimized. Everstream was probably sub-optimized. Even there, you had two pretty competitive processes where you had multiple buyers for those businesses, including private equity or infrastructure funds and strategics. I think that's just a leading indicator of the level of interest that's out there for really well-run businesses that actually own their network.
I think when you take that and you overlay what I think is going to be increasing interest in AI, there's going to be a nice market in the next 12- 18 months.
Right, because it sounds like the Everstream deal could have gone, you know, the stalking horse bid got upped to seven to eight times.
Yeah.
With your company and AI coming, it's at least nine, ten, even north of that.
I agree.
Yeah. On the fiber-to-the-home side, in the past, there's been, you know, maybe fiber providers or copper-to-fiber migration stories that might have like sold too short or too early in the process. You know, what's your thinking about, I guess it depends on the bid or the ask, I should say. Does it make more sense to just continue to build more to extract more value on the fiber-to-the-home side rather than sell a little early? How are you thinking about that?
It's a good question. It's a debatable point. I think that it's great to have the luxury to debate that point because I do think that, you know, we feel very strongly that the convergence theme is not going to go away. You know, we're probably in the fifth or sixth inning of consolidation in that space, and there's still time for this to play out. We have a terrific build plan at Kinetic, and you're really going to see that build engine start roaring later this year, beginning of next. We look at that and think there's a lot of value for us to create organically, and there's a very clear path, right? We've got the Frontier learnings, the Ziply learnings.
On the other hand, if there's a bid out there that we think hurdles that and de-risks that execution and brings in that time value of money, that's something we have to consider as fiduciaries of our business. As I've always said, when it comes to M&A, the best thing you can do to prepare for M&A is have a well-run business that gives you lots of options, and that's exactly what we're focused on.
Got it. I want to talk about the big, beautiful tax relief. You were a REIT, so maybe it's not as big in your world. You know, Windstream was a C Corporation, but they had some losses, etc. How might you realize any benefits from the tax bill that was passed? Were you expecting to be a cash taxpayer anytime soon?
Good question. We were in the past a REIT. We weren't a taxpayer. As part of this merger, we are getting a nice step up. As part of that, we did not anticipate to be a taxpayer in a material way in the foreseeable future. That's now even more true with the big, beautiful bill. I don't think there's going to be a lot of tax leakage in our model. I think where we really benefit, frankly, the big carriers.
Yeah, your customers and your carriers and potential suitors, if you will.
Exactly. I think that's one of the reasons we're seeing a pickup in wireless, candidly, because there is that incremental cash flow. Yeah, $1 billion, $1.5 billion.
Yeah, Verizon $2 billion.
Yeah.
$1.5 billion at AT&T.
Absolutely.
With the last minute, I just wanted to discuss AI internally. We've talked about it, how it's helping your demand on the outside, but inside your company, on both the commercial fiber side and then on the Kinetic side, you know, how is GenAI benefiting the businesses?
Yeah, we're very focused on it. We have an entire team within our IT group that's focused only on AI and innovating AI for the use of our business. I think we also have great partners. We work with Oracle. We work with Salesforce. We work with some big name brand companies that are spending billions of dollars innovating AI for us, customers of theirs. We're very closely coordinated with them. We're a fast follower with people like Verizon and AT&T and T-Mobile who are using it in their business. I would say, I heard Zale say they have 25 use cases. I also heard Morley say he's got 26. We've got 27. The reality is I couldn't put a number on it. What I would say, though, is we're very focused on it.
We're optimistic that we're going to get a lot of use cases from anywhere from fleet management to inventory management, certainly to customer experience and managing customer experience more efficiently, reading legal contracts. Imagine we have hundreds and even thousands of leases that we manage for customers. Having an AI oversight on leases, there's a lot of benefits to that. I could go on and on. I think embedded in our business is no incremental efficiency from AI. I think there is incremental efficiency from AI, not just from a cost perspective, but also from a customer experience perspective.
Great. With that, we're about out of time. Thank you, Kenny.
Thank you, Greg.